Oils Market Report Tuesday January 3rd

Posted by Stelios Theocharous January 3, 2012 - 2:15 pm

Palm oil futures
Palm oil futures closed higher at the midday close this morning following gains in the Asian equity and crude oil markets. Additional support also came from better than expected December export data and the prospect for a sharp fall in palm oil production due to heavy monsoon rains in South East Asia. This is on top of a seasonal fall in yields which could provide some continued support in the coming months, although traders say that the market could see a sharp correction if weather conditions improve in South America and Asia.

Futures closed higher on Friday, up 18-20 ringgits a tonne, as investors covered shorts of ahead of the long holiday weekend on weather concerns, despite ideas of a possible fall in world demand due to the global economic crisis. Cargo surveyor Intertek Agri Services estimated Malaysia’s December palm oil exports at 1.49 million tonnes, down from 1.53 in November. However this is better than market estimates for a 9% fall in exports. The market is waiting for an estimate due later today from SGS.

Soybean futures
Soybean futures closed sharply higher on Friday as traders also covered shorts ahead of the long weekend and higher than expected weekly export sales. Traders are adding further weather premium due to concerns over hot and dry weather in South America, however, current conditions are seen as more of a problem for corn than soybeans as crop conditions will improve if weather conditions improve in the coming weeks. The weekly USDA export report showed soybean exports at 663,200 tonnes, at the high end of market estimates for 300,000 to 700,000 tonnes. Traders will be looking at updated weather forecasts later today for direction as well as further news on the euro zone debt crisis, which were pushed to the side lines last week.

Crude oil futures were trading sharply higher in the overnight market after showed that manufacturing expanded in both China and India in the last quarter of 2011, raising hopes of an increase in oil demand. Some additional support also came from concerns that further sanctions against Iran will limit supply, there was talk over the weekend that Iran could disrupt crude oil exports out of the strait of Hormuz raising tensions between the US and Iran.

With Thanks to Gary Lewis..